I’ve found a home owner who’s in a bit of financial trouble and I’d Iike to see if I can offer him a solution. Basically he’s gotten into a cash flow issue and is having trouble keeping up with his house payments and some other bills.

I’m new to investing so this will all be new territory so I’m looking for some insight or advice from those that may have been there already. I think I may be in a position to help him and make it a good deal for myself as well. Looking for a win - win here.

Several months ago he purchased the property for $39,500 and put about $3k down. His current payments are about $500/mo. (Really High, He has terrible credit) like I mentioned he’s having trouble keeping up payments and I’m considering offering to purchase the property in order to help his cash flow problem.

I'm thinking to purchase the property for around 41k with either a conventional loan or possibly some private money (open to BP lenders if anyone is interested), ARV should be around $50k to $55k. I would then lease option or owner finance the property back to him.

My 1st thoughts were to lease option the property back to him. The deal I had in mind would be a 2 year lease option at $450 per month with a sale price of $50k and $50 each month going to the final sale price. This would lower his monthly payment by $50 but more importantly it would put around $4000 back in his pocket immediately. Not a huge gain for me here at these numbers but I’m looking to help him out and not make huge profits.

I also considered owner financing but not sure what a good deal for each party there would look like.

If I finance the deal with either conventional financing or possibly some private money, depending on interest rates with 20% down my monthly payments should be around $315 to $350. Leaving cash flow around the $130 to $100 range per month but a small profit upon the sale. If the sale goes through it should be about a 40% return cash on cash. If he’s unable to purchase at that point we can restructure.

let me know if any of this seems to make sense or better yet does it sound terrible? Coming from someone who’s never been there, this is all theory at this point.

Like always I appreciate and input you guys can offer.

0 Votes